Let’s talk about other key capabilities of vendor management.
- Measuring Vendor Performance
Now that you have all the data in one place, the next question is: how do you measure whether a vendor is performing well?
ServiceNow makes this straightforward with vendor scorecards and performance dashboards. Instead of relying on scattered reports or subjective feedback, you get a clear view of how vendors are performing against the KPIs and SLAs you’ve agreed on. It becomes much easier to spot trends, identify recurring issues, and have fact-based conversations with vendors during review meetings based on vendor performance scores produced by platforms.
Vendor score is a combination of KPI selected across a category of vendors, depending on the type of service provided by the vendors. Based on the KPIs selected, ServiceNow can monitor the real-time metrics (SLA compliance, CSAT score, Service Availability and others.
You can then further add weight to each KPI to develop a scoring mechanism and hence the vendor score.
- Service Credits for Accountability
Even the best vendors may occasionally miss their commitments. When that happens, organizations are often entitled to service credits as part of their contractual agreements. Tracking these manually can be time-consuming and error-prone.
ServiceNow automates service credit management by:
- Automatically calculating credits when SLAs are breached. You can also generate them manually from vendor incidents or outages.
- Applying credits to contracts or invoices with full transparency.
- Maintaining a clear audit trail for compliance and financial accountability.
This ensures that vendors not only feel accountable for performance but also that the business is protected financially when commitments aren’t met.
- Contracts Management
Contract renewals are another area where organizations can struggle, especially when dates and obligations aren’t tracked systematically. ServiceNow helps by recording contract milestones and providing notifications ahead of renewal dates. This allows vendor managers to prepare in advance and make renewal decisions with better awareness of vendor performance and obligations. SN provides a couple of reports on the Vendor management workspace itself, as given below. You can configure the filter criteria or add new reports based on organization needs.
In the next blogs, we will talk about the strategy and approach to enable vendor management to measure vendor performance.
